Have you evaluated the performance of Estee Lauder's (EL) international operations during the quarter that concluded in December 2024? Considering the extensive worldwide presence of this beauty products company, analyzing the patterns in international revenues is crucial for understanding its financial resilience and potential for growth.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

Being present in foreign markets serves as protection against local economic declines and helps benefit from more rapidly expanding economies. Yet, such expansion also introduces challenges related to currency fluctuations, geopolitical uncertainties and varied market behaviors.

In our recent assessment of EL's quarterly performance, we discovered notable trends in its overseas revenue sections, which are typically modeled and scrutinized by Wall Street analysts.

The company's total revenue for the quarter amounted to $4 billion, showing decrease of 6.4%. We will now explore the breakdown of EL's overseas revenue to assess the impact of its international operations.

A Closer Look at EL's Revenue Streams Abroad

Of the total revenue, $1.49 billion came from Europe the Middle East & Africa during the last fiscal quarter, accounting for 37.31%. This represented a surprise of -0.17% as analysts had expected the region to contribute $1.5 billion to the total revenue. In comparison, the region contributed $1.23 billion, or 36.60%, and $1.59 billion, or 37.13%, to total revenue in the previous and year-ago quarters, respectively.

During the quarter, Asia/Pacific contributed $1.29 billion in revenue, making up 32.14% of the total revenue. When compared to the consensus estimate of $1.27 billion, this meant a surprise of +1.51%. Looking back, Asia/Pacific contributed $944 million, or 28.09%, in the previous quarter, and $1.45 billion, or 33.86%, in the same quarter of the previous year.

International Revenue Predictions

It is projected by analysts on Wall Street that Estee Lauder will post revenues of $3.52 billion for the ongoing fiscal quarter, a decline of 10.6% from the year-ago quarter. The expected contributions from Europe the Middle East & Africa and Asia/Pacific to this revenue are 43.6% and 30.4%, translating into $1.53 billion and $1.07 billion, respectively.

For the full year, the company is expected to generate $14.61 billion in total revenue, down 6.4% from the previous year. Revenues from Europe the Middle East & Africa and Asia/Pacific are expected to constitute 39.7% ($5.79 billion) and 30.3% ($4.42 billion) of the total, respectively.

Key Takeaways

Relying on international markets for revenues, Estee Lauder faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.

In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

Our proprietary stock rating tool, the Zacks Rank, with its externally validated exceptional track record, harnesses the power of earnings estimate revisions to serve as a dependable measure for anticipating the short-term price trends of stocks.

Estee Lauder, bearing a Zacks Rank #3 (Hold), is expected to mirror the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Review of Estee Lauder's Recent Stock Market Performance

The stock has declined by 11.5% over the past month compared to the 2.1% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Consumer Staples sector, which includes Estee Lauder, has increased 1.7% during this time frame. Over the past three months, the company's shares have experienced a gain of 2% relative to the S&P 500's 1.2% increase. Throughout this period, the sector overall has witnessed a 3.4% decrease.

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